Lower Risk= Lower Reward.

In this post I will analyze,  What investments are worth investing and how likely are the returns to happen?  

This question really does not have one straight answer considering the stock market is unpredictable and massive. The United States Stock Market have billions of shares being traded every day, but what share is the right share for you? Jeff Rose, an ace investor of Carbondale Il, argues low risk shares are the way to go because you don’t have to worry about your life savings getting gambled away. Being successful in the stock market really is just a role of a dice. I would say, playing it safe does lower risk but also lowers reward.

Source: http://static.marketintelligencecenter.com

Certificates of Deposit

The safest way to invest are certificates of deposit. “Why are CDs at the top of our best low risk investment list? Because as long as you get a certificate of deposit with an FDIC-insured financial institution, you are guaranteed to get your principal back as long as your total deposits with that lender are less than $250,000. The government guarantees that you cannot have a loss, and the financial institution gives you interest on top of that.” In my opinion, CD’s are safe and with safe comes little reward. CD’s are a way to grow your savings but you won’t be striking it rich.

Treasury Inflation Protected Securities (TIPS)

Another secure way to invest is through bonds. Bonds are safe because their is a fixed so you won’t lose money. You can invest bonds two different ways “The first is a fixed interest rate that doesn’t change for the length of the bond. The second is built-in inflation protection that is guaranteed by the government. Whatever rate inflation grows during the time you hold the TIPS, your investment’s value rises with that rate.” Investing bonds are very safe and do have a higher earning rate, however it still is not maximizing your income, but it is minimizing your risk.

Dividend Paying Stocks and Mutual Funds

A easy way to invest stocks and bind is through dividend paying stocks and mutual funds. This is more risky however. Companies can falter and you could lose all your investments. You can however invest “money into a dividend stock mutual fund.” “With this fund type, the fund company targets stocks that pay nice dividends and does all of the work for you. You also get diversification so that one or two stocks can’t tank your entire investment.” These, I would argue, are more rewarding. When you see your reward your investments will become worth it.

Although investing is scary and you could lose a lot of money it is a way to gain a lot of money with very little work. Investing allows you to grow your fortune as long as you invest smart and take a few risks along the way.

In my next blog post I will research the question: When is it the right time to invest?